Ready for the global stage
With digital transformation boosting enterprise tech intensity, Indian software-as-a-service players have gained immensely
The recent listing of software-as-a-service (Saas) player Freshworks on Nasdaq may have hit the headlines, but the Indian Saas story is much older and the industry is gearing up to move onto global platforms.
A recent report by SAASBOOMI (Asia’s largest Saas community), Mckinsey & Company, and Nasscom concluded that India could well be on the cusp of unlocking a $1 trillion opportunity. The global Saas market is expected to cross $500 billion in revenues by 2025, growing at 18-20 per cent a year, and to reach $1.3 trillion by 2030.
Why is the Indian Saas ecosystem suddenly in the limelight? Clearly, the successful listing of Freshworks cannot be the only reason.
Sridhar Vembu, co-founder and chief executive officer (CEO) of Zoho Corp, one of the earliest Saas players from India, reckons that it is because the Indian product ecosystem is maturing. “What you see today is based on the foundations that were laid almost 15 years back, when we started off.” Also, he notes, “the revenue traction that you are seeing in some of these players is real, which then attracts investors, too.”
But, he adds a key reality check: “Next, we have to scale up from million to billion-dollar companies.”
For the ecosystem to thrive, says Vembu, the next step would be to move into deeper areas of cloud infrastructure, developer tools and the hardware infrastructure needed to support Saas.
The Covid-19 pandemic also created conditions conducive to the adoption of Saas, as more companies started shifting online. Saas is expected to generate about 80 per cent of software revenues by 2030, up from about 35 per cent currently. The SAASBOOMI report expects digital transformation to drive a 60 per cent increase in enterprise tech intensity over the next 10 years. As a result of these secular trends, the global Saas market could be worth about $1.3 trillion by 2030, led by growth in content, collaboration and remote-work enablement software.
This growth in the global Saas ecosystem has had a rub-off effect on Indian players, too. India saw six unicorns being absorbed into the Saas ecosystem during the pandemic: Postman, Zenoti, Innovacer, Highradius, Chargebee and Browserstack. In 2020, $1.5 billion was invested in Indian Saas companies, representing a four-fold jump over the last two years.
Manav Garg, founder and CEO of Eka Software Solutions, and founding partner of SAASBOOMI, says that India is the world’s second-largest developers’ market, and hence product creation will be the next big boom. “The report identifies 400 different subdomains that the Indian Saas ecosystem can work on. Infrastructure developer tools, automated user interface, and cloud tools could well be among the hot bets for India. Add to this the open-source moment, and because we are tech-oriented, the open-source environment can easily be used to create momentum.”
The other reason for India’s Saas growth story is the country’s digital progress gaining momentum through e-commerce. With retailers wanting to tap into the growing ecommerce boom, many Saas startups have witnessed a big market for their services. One such is Bengalurubased Mason.
Mason uses a no-code store merchandising tool kit and is a vertical Saas solutions provider that helps e-commerce teams to run their shops online. It uses a “freemium” model, in which businesses can start for free, and begin paying as they scale up their usage.
Says Kausambi Manjita, Mason’s co-founder and CEO: “No-code was important because we wanted to be ‘India first’. As serial entrepreneurs, we had worked in the enterprise Saas before, and then we realised that democratisation of solutions is key. That is driving a lot of the India Saas ecosystem. That is the reason we are seeing a rise in the micro-saas segment.” The company focuses on building micro-frontends, data platforms, predictive algorithms and models, among other things.
Saas is not a winner-takes-all sector, so you need to be sure that you make a good product and have marketing spends that match
MANAV GARG Founder and CEO, Eka Software Solutions
The revenue traction that you see in some of these players is real. But now, we have to scale up from million to billion-dollar companies
SRIDHAR VEMBU Co-founder and CEO, Zoho Corp